Residential Construction Boom in Virginia

Historically low mortgage rates have created a strong demand for homeownership in the state of Virginia but record low inventory has presented a challenge. In fact, the number of single-family homes available for sale statewide in August of 2020 was 42.2% lower than the previous year according to Virginia Realtors Chief Economist, Dr. Lisa Sturtevant.

SOURCE: Virginia REALTORS

Shift in Demand

With more homeowners remaining in their homes longer thanks to a refinancing boom, there are no signs the inventory of homes for sale will increase this year. However, new residential construction is on the rise with a shift in demand in rural and suburban markets, as well as larger single-family homes. In September of 2020, the number of permits issued for single-family homes accounted for more than 70% of all permits issued.

SOURCE: U.S. CENSUS BUREAU

Permits for new single-family construction surged 15% in the third quarter of 2020 while permits for multifamily housing units decreased by 16% compared to the third quarter of 2019. 26,548 permits were issued for new housing units in Virginia from January through September of 2020. Year-to-date, about 78% of permits for new residential units were issued in the state’s largest metropolitan areas, (Northern Virginia, Richmond, Hampton Roads, and Charlottesville).

SOURCE: U.S. CENSUS BUREAU

The number of residential building permits issued in Northern Virginia was down 24% during January through September of 2020 compared to the same period in 2019. Permits for new housing construction in the Richmond metro area was also down by 12% compared to 2019. Building permits were up by 15% and 3% in the Hampton Roads and Charlottesville areas, respectively with the number of residential building permits surging by more than 150% outside of these four metro areas in 2020. Although there is a significant inventory shortage in the state of Virginia this year, buyers can look forward to a bevy of new inventory to choose from in 2021.

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